Investors Have Been Moving Into Secondary Markets

Investors have been moving into secondary markets such as Dallas and Minneapolis amid growing confidence in the recovery and soaring prices that drove down yields on office buildings, shopping malls and apartments in prime cities including New York, San Francisco and Washington.

The trend may be cut short. Turmoil in financial markets over the past three weeks -- triggered by concern that Spain and Italy will struggle to pay off their debts, signs that the U.S. will remain mired in sluggish growth through next year and Standard & Poor’s downgrade of the U.S. credit rating -- may send buyers back to prime cities and push prices even higher, as long as the economy doesn’t deteriorate so much that trophy properties suffer.

Tech Meets the Tenderloin

NNN Lease Market News


The growth in technology businesses that has boosted the San Francisco office market has spilled over into a blighted six-block stretch of Market Street that until now has missed out on most booms in the city's commercial-property valuations.

The "midmarket" office corridor on the southern edge of the Tenderloin district got its first boost in April when Twitter Inc. announced plans to relocate its headquarters to the gritty area better known for empty storefronts and government workers than Internet buzz.


http://online.wsj.com/article

U.S. commercial Rents Will Reach Their Former Peak Levels By 2015

U.S. commercial rents will reach their former peak levels by 2015, with growth in office and warehouse rates surpassing the apartment sector in two years, according to a forecast by RREEF.

Buildings in New York, San Francisco, Boston, San Diego and San Jose, California, will have some of the strongest growth after office rents fell 4.9 percent nationally last year, Alan Billingsley, head of research for RREEF, an investment unit of Deutsche Bank AG (DB), said yesterday at a conference in San Francisco.

“Net operating income is still moving downward, but when rent growth starts, it really takes off,” Billingsley said.

U.S. commercial property prices fell 4.3 percent from a year earlier in January, the second straight monthly decline, as distressed sales in all sectors held back values, the Moody’s/REAL Commercial Property Price Index showed March 22. The delinquency rate on loans packaged as commercial mortgage- backed securities rose to a record 9.2 percent in February, Moody’s said March 15.

www.bloomberg.com/news